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Consumer Finance Global Overview 2018

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Trends Shaping Consumer Finance

  • 100 million newly banked consumers
  • Payment policy focus
  • Fraud on the rise in key markets
  • Asia Pacific growth slowing
  • Credit increasing over debit

Global Outlook

Card and electronic payments continue to take global consumer payment share from cash and other paper payments. From 2016 to 2017, the card payment landscape has moved towards greater credit adoption in both emerging and developed markets as consumers’ confidence in the economic future increases, and more credit is available. With greater card spend however, there has been a rise in fraud in several markets that could further move consumers towards more secure digital payment alternatives.

Card payment value continued to accelerate from 2016 to 2017 with an increase of USD1.4 trillion. The 5.8% growth of card value from 2016 to 2017 was an improvement from the previous period of 4.3% but is expected to further moderate over the forecast period. Growth is expected to exceed the growth of consumer payments overall due to cash conversion efforts. However, with consistent growth over the forecast period total card payment value is projected to reach USD32.1 trillion by 2022. This expected growth represents more than a doubling of global payment value from 2012.

Source: Euromonitor International 

Middle East, Africa and Eastern Europe

The Middle East and Africa and Eastern Europe have the highest expected CAGR rates for card payment value over 2017-2022 with 9.3% and 11.8%, respectively. This can be attributed to the current low card penetration but also as governments enact regulations increasing the cost of cash. Advances in mobile devices have also provided access to financial products and services to broad consumer segments that were previously unreachable.

Unbanked and financially underserved populations

There were 850 million consumers over the age of 15 that were unbanked in 2017 in the 47 markets researched by Euromonitor. Providing greater access to financial services by lowering the cost and increasing the reach is the easiest way to increase total card value. In 2017, there were 974 million underserved consumers across the same markets. Partnerships between payment companies and policy makers have proven effective to address this.

Premium credit card products

With more consumers moving back to credit cards, there has been greater competition among card issuers. There are more rewards and loyalty schemes enacted to keep existing customers engaged and capture Millennials. With credit cards projected to generate an additional USD4.8 trillion over the forecast period it is in the best interest of card payment companies to invest in providing a range of reward platforms that are relevant to specific consumer segments.

Capturing digital payments in shifting retail landscape

Online retailing has been a consistent driver for card and electronic payments over the survey period but the pace of growth over the forecast period will be greater. Merchants need to adapt to reach consumers on a variety of platforms. The shopping experience has become important to consumers, and payment companies are in a unique position to help. Moving the transaction to the background and ensuring security are two potential avenues.

Changing retail format translates to more m-commerce

For a number of years, digital payment platforms were underdeveloped and underinvested, making online retailing a cumbersome and potentially risky venture. With several technology companies partnering with the traditional card payment players, the simplicity and security of the process is now far superior. The share of online retail value is expected to increase from only 4% of total retail value in 2011 to 13% by 2021, or a shift of USD2 trillion over the next five years. The share of online retailing that takes place on mobile devices is expected to surpass the value from other online sources by 2021. The move of retail online has greatly benefited card payment growth over the historic period and will become more pronounced over the forecast period. Additionally, more mobile retail formats make online purchases offer stored card information leading to one-click/-touch purchases.

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